European Union

The European Union: Separating Myth from Reality

Despite its self-congratulations, the EU is not responsible for 60 years of peace and prosperity in Europe.


On Thursday, the British people will decide whether or not to stay in the European Union. The U.S. foreign policy establishment, President Barack Obama included, have urged the British to remain in the EU. The latter were not amused, noting that the United States does not care what the Europeans think when it comes to American relations with Canada and Mexico. So, in preparation for the British referendum on the EU membership, let us take a closer look at the EU: what is it and what has it accomplished?

This is how the EU answers those questions: "The EU is unlike anything else—it isn't a government, an association of states, or an international organization. Rather, the 28 Member States have relinquished part of their sovereignty to EU institutions, with many decisions made at the European level. The European Union has delivered more than 60 years of peace, stability, and prosperity in Europe, helped raise our citizens' living standards, launched a single European currency (the euro), and is progressively building a single Europe-wide free market for goods, services, people, and capital" (my emphasis).

This self-congratulatory assessment of the EU's achievements is deeply problematic. Consider peace and stability. The EU's narrative ignores, for example, the roles played by Germany's unconditional surrender, Anglo-American occupation of West Germany, the rise of the communist threat in the East, and the creation of the North Atlantic Treaty Organization—all of which preceded the creation of the first and extremely tentative pan-European institutions. It also ignores the EU's failure to deal with the Yugoslav crisis in the early 1990s, which was eventually "resolved" by the application of American military strength.

Moreover, many Europeans see the EU as responsible for the growing instability in Europe. They see monetary policy as a source of friction between nation-states, with the relatively well-off Germany and Austria on one side, and the failing Greece and stagnating Italy on the other side. The same is true of the EU's failure to come up with an effective response to the recent wave of immigrants from the Middle East and North Africa, thus pitting the generally welcoming German government against the unwelcoming governments in Central and Eastern Europe.

Consider, also, prosperity. The role of the Marshall Plan in stimulating economic growth is, at best, controversial, but omitting it altogether from the EU's narrative of Europe's post-war recovery is self-serving. Similarly, Western European economies began to recover, as was to be expected, when the war ended and long before the signing of a free-trade agreement known as the European Economic Community in 1958.

That is not to say that intra-European trade liberalization was not beneficial. It was, beginning in the 1960s. (The last intra-European tariffs did not disappear until 1968.) In the meantime, Western Europe benefited from domestic reforms, such as Ludwig Erhard's liberalization of the West German economy in 1948, and the global reduction of tariffs under the General Agreement on Tariffs and Trade (GATT), which started in 1947. The official EU narrative tends to omit all of the above inconvenient facts.

Figure 1: GDP, Average Growth per Decade, Percent (1949–2008)

That is not to deny the strong desire for peace and prosperity among European peoples and their leadership after World War II. Rather, as I argue in a paper that will be released by the Cato Institute tomorrow, the EU institutions were, for the most part, ineffectual, and have increasingly become liabilities. As the example of Switzerland shows, there is no a priori reason to think that a looser cooperation between European states, which would follow British withdrawal from the EU, is incompatible with peace and prosperity.

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  1. I vote out.

    Consider, also, prosperity. The role of the Marshall Plan in stimulating economic growth is, at best, controversial

    Britain got more Marshall Plan funding and took longer to recover than Germany.

    1. Britain didn’t finish rationing until almost 1960, I think, for some categories. Price controls work so well! West Germany took the brave step of setting their currency free instead of trying to control it, which was partly responsible for freaking out the Soviets who reacted with the Berlin blockade.

      Neither government learned the lessons.

  2. Figure 1: GDP, Average Growth per Decade

    GDP is a crap measure of economic health. It tries to agregate too many independant factors and becomes a useless value.

    1. This may sound like it argues against being able to assert my first statement as fact, but I contend that the shortages in the UK and surpluses in Germany in the 50s and leading into the 60s indicate that one country had recovered from the war economically while the other had not.

      1. Your about the Marshall,plus,Great Britain went very socialist beginning in the 50’s until Thacher came along.Then again, Europe has been living under the protection of the U.S. military and still does.That’s a huge factor.

  3. Well as a grand exercise in protectionism and wealth redistribution it’s been a screaming success

    1. I don’t think those screams are from success.

      1. Thank you sir,may I have another.

        1. You don’t want that scent of Cologne, lad.

  4. “with the relatively well-off Germany and Austria on one side, and the failing Greece and stagnating Italy on the other side.”

    God I hate when they do this.

    Look at the graph. All of Europe is ‘stagnating’ including Germany.

    1. Actually, the most recent data has southern Europe outright tanking.

      1. *plus that graph, asive from stopping at 2008, has a skew resultant from the post-war recovery. Germany had been bombed to a near zero GDP, so their early bounce back would naturally be massive in percentage terms. It’s easier to expand on empty ground.

        1. Not sure what you mean by that, but Europe (specifically Germany and Italy) witnessed an ‘economic miracle’ which explains the 49-58 graph. But still, they’ve all come off quite a bit and tend to move in similar fashion. Which was the point of the ECC/EU.

      2. Define ‘tanking.’ Household to debt? GDP?

        I’ve been hearing that since the 80s just like how Japan was supposed to take everything over.

        1. Negative growth with increasing unemployment qualifies as economic tanking in my book, especially given how long they’ve been in such a circumstance.

          1. Ah. Yeh. Things aren’t great on that front. Restrictive labor policies don’t help.

            And America better be careful because the crap I see about the new economy is a worrisome trend for a free economy.

            Don’t go full Europe!

    2. God I hate when they do this.

      Tupy, like most who don’t have to live under the EU’s policies (and Non-EU countries coerced into compliance), has a narrative to push.

      The same is true of the EU’s failure to come up with an effective response to the recent wave of immigrants from the Middle East and North Africa, thus pitting the generally welcoming German government against the unwelcoming governments in Central and Eastern Europe.

      I notice that nowhere really did Tupy mention both the expanded welfare states of most of these countries *AND* how the bennies are directly targeted immediately for migrants as well as right-out-of-the-box migrant employment quotas in EU countries. Like noted powerhaus and de facto leader of the EU, Deutchland (whose leader is on record saying, “Multiculturalism has been a miserable failure.”).

      I hope Brexit commences, since they were smart enough to keep the GBP as a, “JIC..”

      1. I think this is the part of the exercise I fear gets overlooked, while we focus too much on ‘economic data’ as we did above.

        1. Indeed, what gets most overlooked is how the actual populance feels about the uncontrolled migrations and importations. Also missing from this article is Turkey and Master Blaster, “Who run Bartertown Erdogan’s role in this clusterfuck. Tupy’s attitude appears to be Europe should have been ready at a moments notice to have its countries social systems overloaded in a fortnight.

          At least UKR has the Black Sea as a natural buffer, such as it is.

          1. Yet. Another angle where ‘southern’ Europe is concerned. The welfare apparatus they have are imported from Germany. It’s Germany who came up with the idea of an economy ‘run by experts’. Soon after its unification, they had quite an influence on economic affairs.

            The biggest mistake, to me, countries like Italy did was to embark on that track for the simple reason Italians are a more anarchistic in spirit lot than deferent Germans. Maybe economically the south is a mess, but the Germans are contributing their own mess in other ways. They would have been better off with the liberal economic model of Great Britain; tailored to their needs of course.

            Germany introduces these ideas but we shouldn’t be surprised it doesn’t ‘fit’ to some countries. Never mind Italy and Greece have classical ancient heritages – to the extent this has any bearing.

            1. I might add this ‘anarchistic spirit’ probably has a lot to do with the fact many of them felt disillusioned so soon after Unification. There’s always been an admiration for ‘German thrift and directness’ and ‘English sense of fair play and organization’ in Italy.

      2. This wasn’t exactly a pro-EU article

  5. For your reading pleasure:

  6. You know who else wanted to bring all of Europe under one government…

    1. FIFA?

    2. Tariq ibn-Ziyad?

  7. The EU is a statist’s dream and a libertarian’s nightmare. Hopefully Britain will do the right thing and get the hell out, followed by a few other nations.

    1. The UK has no spine and will cave. They aren’t leaving anything.

      1. So a European version of Texas?

        1. Too much tax, too much government control, too few guns. Not Texas-y enough.

        2. At least Texas has the excuse that the American government would never allow succession. No one will be invading the EU.

          1. *UK

            1. You know who else didn’t invade the UK ….

              1. The Monkees?

        3. Texas has no independent military force to speak of, a substantial portion of the population (including but not limited to people who have moved to Texas for the job market) who do think of themselves as American first and Texan second, and are part of a legal regime (the US Constitution as interpreted in Texas v. White, 1869) that says secession is illegal. If it decided to secede, it would not succeed, pinched between the rest-of-US military forces, the portion of the Texas National Guard that would obey a Federalization order, and useful levels of civilian support. Accordingly, only an idiot would actually try to push through secession.

          The UK has its own independent nuclear arsenal and substantial military, very few citizens who think of themselves as European first and British second, and are part of a legal regime that specifically allows for withdrawal (the Lisbon Treaty). If it decides to leave the EU, it will leave the EU.

      2. That’s the thing about Britain. I wish it would be a case of a former power reclaiming its classical liberal heritage and going about things away from the technocracy of the EU.

        But it’s not the case if Britain in its current form is to be believe.

        No winners here.

    2. When I was little, I learned about the Common Market, & that was great. I didn’t know then that it was just the beginning of a process leading to the EEC & then the EU, which are increasingly bad. Why couldn’t they have quit while they’re ahead?

      The Common Market was a libertarian’s dream & a statist’s nightmare: no tariffs between any of the member countries. Was part of the original plan the eventual statist’s dream & libertarian’s nightmare of what amounts to rule by a committee’s decree over an empire, erecting barriers to everyone’s biz while proclaiming the benefits of uniformity thereof?

  8. The European Union US military might has delivered more than 60 years of peace, stability, and prosperity in Europe

    1. Take about ignoring the elephant in the room! The EU didn’t deliver that, the US did.

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  10. this is all just a distraction from what australia is planning.

    1. We’re not planning anything, shut up or you’ll ruin it.

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